Whether basic exemption limit limit is applicable on trust..if yes, then please give me proper sec reference.
Thnx in adv
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Taxation of trust
Replies (5)
The taxation of a trust is governed by section 11,12 & 13 of the Income Tax Act.
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Since its income is generally exempt from the tax due to its CHARITABLE PURPOSE hence if 85% of its income is "applied" towards the object for which it is being run then the whole income is tax free hence no question of any exemption limit.
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For example; if Total Receipts are Rs. 10 crores...and "application of income" i.e. incurring expenses and acquisition of assets are more than 8.5 crores; then the tax is not required to be paid.
85% of income shall be applied before 5 years otherwise it will be taxable
There is no basic exemption to the taxable income. If it is a charitable trust, exemptions available u/s 11 (1) (a) and Explanation 2 to section 11 (1) and also Section 11 (2) can be availed.
Section 11 & 12 of the IT act covers on Trust.
Further as income from Trust is generally exempt from the tax due to its CHARITABLE NATURE & IF 85% of its income is "applied" towards the object for which it is being run then the whole income is tax free .
So the question of exemption limit does not arrise.
Apart from the above provisions a donor to such a trust or
institution is also entitled to benefit of deduction from his income on
account of the donation made by him. The amount of deduction is
prescribed in section 80G(2)(iv). Section 80G(5) contains preconditions,
which must be satisfied cumulatively, before the donation to the trust or
institution becomes tax deductible in the hands of a donor
To
CA SURENDRA KUMAR RAKHECHA
Thanks for giving solution,and you mean exemption is allowed 15% indirectly is it correct or not...?
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